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-- Posted Wednesday, 19 March 2008 | Digg This Article | Source: GoldSeek.com

The Metals:

The financial problems revealed at Bear Stearns that may exist at other firms as well has inspired a general deleveraging of investments of all kinds to pay back loans and lower the level of leverage from ridiculously high levels.  This has resulted in the selling of everything, whether it is gold and silver, commodities, or stocks.  When you can’t sell what you want to sell than you have to sell what you can sell, and normally what tops that list are your winning positions.  Gold, silver, and oil are among the few things that have done well for several months and their much anticipated correction came today.  The only question now is how long will it last before their bull markets resume?  With more financial problems evidencing themselves so frequently it can’t be long before people return to the only real money of gold and silver, and that is just one of many reasons driving them higher.

Gold dropped to $976.27 and silver fell to $19.515 in after hours access trade yesterday before both metals rebounded in Asia and climbed back near unchanged at as high as $997.15 and $20.09 by early trade in London, but they then plummeted for the rest of the session and closed near their lows of $941.07 and $18.177 with losses of 5.8% and 7.5%.

Euro gold fell to about €604, platinum lost $85 to $1905, and copper fell over 11 cents to about $3.66.

Gold and silver equities fell throughout the day and closed roughly 7% lower.

The Economy:

There were no major economic reports today.  Tomorrow at 8:30AM EST brings Initial Jobless Claims for 3/15 expected at 360,000 and at 10AM is the Leading Economic Indicators report for February expected at -0.3% and the Philadelphia Fed survey expected at -18.0.

The Markets:

Charts Courtesy of http://finance.yahoo.com/

Oil fell almost 5% on long liquidation and weak demand levels reported in today’s inventory reports that also saw crude supplies rise 200,000 barrels, gasoline inventories fall 3.5 million barrels, and distillates fall 2.9 million barrels.

The U.S. dollar index continued its bounce higher after yesterday’s smaller than expected rate cut.

Treasuries rose after stocks eventually gave back more than half of yesterday’s notable gains.

The Dow, Nasdaq, and S&P rose in early trade on news that Fannie Mae and Freddie Mac had their capital requirements reduced from 30% to 20% to help liquefy the housing market, but the three indices fell over 2% by the close after rumors surfaced about problems at Merrill Lynch that reignited worries over the financial stability of the system.

Among the big names making news in the market today were Fannie Mae and Freddie Mac, Visa, Goldman Sachs, Morgan Stanley, Lehman Brothers, General Mills, and Adobe.

The Commentary:

“All is well in La La Land now that Bear Stearns has imploded. All is well because investment banks can borrow from the Fed for no other reason than to show it is good to borrow from the Fed, and they didn’t need the money.

Are you mad?

Spin on use of the Fed loan facility used by major international investment banks to demonstrate that there is no stigma in using it is raving BS. These firms needed the money and media spun it. That is so silly only raging emotions would be moved by it. They borrowed the money from the Fed for the same reasons that every previous loan was made.

Key investment banks using commercial dealers hammer gold, targeting stops and forcing the highly leveraged (margin) mad traders to bail out as Black Box algorithms fire out mindless sell and sell short orders.

Because major investment banks are public companies they cannot make loans at the Fed and fail to inform their shareholders as it is a material event to their balance sheet condition thereby revealing both the degree and time of borrowings.”- Jim Sinclair, More at JSMineset.com

“April Gold finished down 59 at 945.3, 40.2 off the high and 5.3 up from the low.

May Silver closed down 1.515 at 18.445. This was 0.195 up from the low and 1.39 off the high.

The gold market already showed signs of weakness in the prior trading session and with the Dollar managing a slight bounce and oil prices coming under aggressive liquidation pressure it wasn't all that surprising to see gold come apart. Certainly the magnitude of the speculative long built into gold contributed to the washout but something major seemed to have shifted in the markets sentiment. Certainly the broad based selling wave seems to give off the impression of a coordinated washout but it is possible that the trade is either sensing a turn in the Dollar or perhaps renewed concerns that slowing is set to dampen inflationary pressures. It is also possible that some in the gold trade think that the US Fed has done enough to temporarily reduce the financial contagion threat but it is also possible that the broad based washout in gold was the gold markets realization of the potential for recession.

Like a host of other physical commodity markets the silver market seemed to be undermined both technically and fundamentally. Seeing the Dollar bounce, oil and grain prices sharply lower and growing concerns of slowing outside of the US is really a long list of undermining factors and with the recent record rise in silver prices, it isn't difficult to assume that silver prices were overdone. In the end, the silver market on Wednesday was seeing selling impetus from both its financial and physical commodity market angles.”- The Hightower Report, Futures Analysis and Forecasting

GATA Posts:

Investment banks are borrowing from Fed

Backstopping Bear, Morgan saved the shadowy derivatives world

TV worth watching: Taylor on devaluation, Embry on gold suppression

High oil prices likely to increase pressure on the dollar

Amsterdam's small currency shops stop taking dollars

Dollar's fall could explode global yen carry trade

Ambrose Evans-Pritchard: Bailouts better than returning to 1930s

The Statistics:

As of close of business: 3/18/2008

Global Gold ETF Holdings

[WGC Sponsored ETF’s]

 Note: No change in Total Tonnes from yesterday’s data.

COMEX Gold Trust (IAU)

 Note: Change in Total Tonnes from yesterday’s data: 2.46 tonnes were added to the trust.

Silver Trust (SLV)

 Note: Change in Total Tonnes from yesterday’s data: 30.81 tonnes were added to the trust.

The Stocks:

South Africa's power situation, Aurizon’s (AZK) 2007 financial results, NovaGold’s (NG) senior notes offering, Atna’s (ATN.TO) closed merger with Canyon (CAU), Endeavour’s (EXK) CFO change, and Great Panther’s (GPR.TO) upgraded resource estimate were among the big stories in the gold and silver mining industry making headlines today.

WINNERS

LOSERS

Winners & Losers tracks NYSE and AMEX listed gold and silver mining stocks that trade over $1.

All of today's gold and silver stock news:

Odyssey Announces Consolidation Proposal - More
- March 19, 2008 | Item | E-mail

Scorpio Announces Termination of Merger Between Scorpio Gold and BacTech - More
- March 19, 2008 | Item | E-mail

MacMillan Appoints VP Exploration for Peru - More
- March 19, 2008 | Item | E-mail

Buchans River's joint venture partner Prominex Resource intersects 6.87 metres of 19.8% base metals at Tulks Hill - More
- March 19, 2008 | Item | E-mail

Queenston Closes $10 Million Financing - More
- March 19, 2008 | Item | E-mail

Petaquilla Minerals Ltd. Retains Manager for Molejon Gold Mine - More
- March 19, 2008 | Item | E-mail

Sunridge Closes Private Placement - More
- March 19, 2008 | Item | E-mail

Timminco Added to S&P/TSX Composite Index - More
- March 19, 2008 | Item | E-mail

JNR Announces Results of 2007 Way Lake Exploration Program - More
- March 19, 2008 | Item | E-mail

New Island and Anaconda Update Pine Cove Development and Exploration - More
- March 19, 2008 | Item | E-mail

BacTech Announces Termination of Proposed Merger With Scorpio Gold Corporation - More
- March 19, 2008 | Item | E-mail

Mantis Minerals Announces Orphan Diamond Drill Program - More
- March 19, 2008 | Item | E-mail

Globex Mining Enterprises Inc./Blackcliff Property: Up to 5.89 g/t Au Over 7.4 M - More
- March 19, 2008 | Item | E-mail

Rockcliff's Airborne Survey Identifies Untested Anomalies at its Snow Lake VMS Project, Manitoba - More
- March 19, 2008 | Item